By Juan A. Perez III

In the next 20 years, a demographic dividend of P20.388 trillion is at stake.

The Philippines has turned the corner on its “ballooning” population and could gain from its ideal demographics if it gets its population and development (Popdev) policies going in the right direction. Latecomer Philippines is now just ahead of the Lao People’s Democratic Republic and Timor Leste in the Association of Southeast Asian Nations (ASEAN) in terms of growth potential from the demographic dividend. The country attained a fertility rate of 1.9 children per woman in 2022. The decline in the fertility rate goes together with a high proportion of the total population being productive.

This important development was emphasized during the Philippine celebration of the 30th anniversary of the International Conference on Population and Development last April. The passage of the Responsible Parenthood and Reproductive Health (RPRH) Law in 2012 made the commitment to population and development more credible.

The Department of Health (DoH) and the Commission on Population and Development (Popcom) carried out this commitment to reproductive health during the Aquino and Duterte administrations. By 2017, the country had probably achieved 2.1 replacement fertility. By 2019, then Popcom Chair and National Economic and Development Authority (NEDA) Secretary Ernesto Pernia would note that poverty levels stood at 16.2% among families (21.1% of the population), the lowest poverty level this century, in part due to the strict implementation of the RPRH Law.

COVID-19 would accelerate the fertility decline further to 1.9 by 2022, but with an increase in poverty levels. The Philippine Statistics Authority (PSA) projections show that the country is growing by around 900,000 Filipinos a year or a population growth rate (PGR) of under 1%. At the turn of the century, the PGR was 2.34%.

Demographic transition is a beginning, not an end to population dynamics.

Ambisyon 2040, announced during the Aquino Administration, is the roadmap to Philippine Development for the next four administrations. Here, the NEDA put population and development through the RPRH law as the 10th priority. Under the Marcos administration’s Philippine Development Plan, declining fertility and the demographic transition are seen as a given, a fait accompli, a gift from the previous administrations.

However, the Philippine Population and Development Plan of Action (PPDPOA) was approved almost a year after the Marcos Philippine Development Plan. (A Memorandum Circular was issued by the President only on Nov. 14, 2023). The Popcom Board now must ask its member agencies to retrofit their own plans of action to achieve the PPDPOA.

Some countries have found themselves at the same demographic spot and failed to achieve any significant economic gains. One can think of Egypt, Brazil, and in the future, India. The Philippine government would be grievously mistaken if, because of overconfidence, it takes a bow at this stage and forgets the message of fellow Filipino Rafael Salas, the first head of the United Nations Population Fund: “People should be at the center of development.”

A demographic dividend of P20.388 trillion can be realized by 2045.

It was projected that with the right “Popdev” policies — i.e., maintain an early decline in fertility from 2018-2022 — would have increased individual income by 2.9%, contributing up to P2.6 trillion by 2022 alone. By 2045 the dividend is expected to reach P20.388 trillion.

The PSA projects that the population will continue to maintain a fertility rate below 2.1 children per woman, declining to 1.7 by 2055. That means the Philippine population will continue to grow, but at a population growth rate that would be at 0.17 % by 2055.

In the last decade, countries have started to quantify their efforts to achieve the demographic dividend. Oying Rimon, Director of the Gates Institute in Johns Hopkins, has led in developing a Demographic Dividend Effort index that has been applied in Africa and Asia, including the Philippines. Countries are now consciously working towards this demographic opportunity rather than just lucking into a demographic windfall.

A neighboring country, Thailand, adopted the National Transfer Accounts (NTA) in 2012 to track its demographic dividend. Since Thailand had achieved replacement fertility of 2.1 in the 1990s, by 2011 its demographic dividend had started to decline, but could be sustained significantly up to 2040 if they could tap a second and third demographic dividend.

Clearly some countries look at the demographic dividend as a gift that keeps on giving, for up to two generations (50 years).

A key indicator Thailand is using that is linked to NTA is the Support Ratio, which was adopted by Popcom in 2019. The first estimates were made by the UP Population Institute to track national and subnational or regional progress towards the demographic dividend.

What is to be done?

Keep fertility low. The 2017 study that projected a dividend of P20 trillion anchored its conclusion on early and consistent fertility decline in the next 20 years at least. To achieve an outcome, Prof. Michael Del Mundo recognizes the following as the key to fertility decline:

• Delayed marriage (leading to delayed fertility)

• Lower sexual activity

• Higher contraceptive use

• Lower desire for large families, mainly among women

Some quarters may think Family Planning is no longer relevant, but women are just postponing having children to age 25-35 when their incomes are higher. And the program now needs to support working women who are also seeking to limit their children. Limiting methods such as tubal ligation and vasectomies will have to be ramped up. The increasing fertility in the 10-14 age group needs attention from local governments. Local governments must also extend social protection to adolescent mothers and children.

Evidence also shows that delayed marriage and higher contraceptive use have had the greatest impact on lower fertility.

Further, the current Philippine Development Plan seeks to expand and maximize the workforce from the record number of working age Filipinos. This is crucial to the support ratio (SR), which is the result of effective workers supporting a dependent (young and older persons and the unemployed) population. Increasing the number of effective workers can only lead to a more positive support ratio (anything above 0.5).

This is how the support ratio was determined for 2019: Effective workers (41,612,911) divided by Effective consumers (93,357,939). Thus a national support ratio of 0.446.

By determining the SR by region, the government can establish the level of effort it needs to exert to achieve a desired SR of 0.5.

It is also clear that an effective worker needs an effective income. Per capita income directly supports the demographic dividend. If one matches the monthly income needed by a family of five as determined by the PSA (P13,797), not even the minimum wage in the National Capital Region (NCR) of a single worker can support a household. Which leads us to the need for more than one worker per family in the NCR and up to four workers per family in the Bangsamoro Autonomous Region in Muslim Mindanao (BARMM).

With women’s participation in the labor force hovering around 50%, any increase in their participation will immediately boost the SR. An increase of women in the labor force of up to 70% will lead to the SR reaching 0.54 in the near term.

Lower fertility of women can also lead to a gender dividend as the need for childcare diminishes. Family planning increases women’s options, and thus allows women to join the workforce. Lower fertility afforded by improved family planning services can also increase the support ratio by up to two percentage points.

Since the country started its fertility decline in 2017-2018, government agencies should be seeing the benefits of shifts in the population structure. Basic education should be a clear beneficiary. Resources can be shifted from school building and staff support for lower grades and kindergarten to improved teacher training, for example.

The PSA census data show that the population of five-year-olds stood at 3,103,000 in 2010, and this went down to 2,174,000 in 2020. This 50% reduction in enrollment will continue to generate savings over the next decade.

Yet, the Department of Education’s projection in 2023 is that enrollment will continue to grow at 1.5% to 2% with increasing demand for facilities and staff. Its enrollment data for public and private schools in kindergarten hit a peak of 2.3 million in 2013 and currently stands at 2 million.

The Department of Education is an illustration of how public goods can relate to Popdev policies and programs. All agencies of government should investigate their contributions to Philippine population and development. And Congress should look at the changing Philippine population structure as a guide to craft a responsive government.

Dr. Juan “Jeepy” A. Perez III specializes in public health administration, primary healthcare, demographic and population development policy, and has worked with nine Health Secretaries and three NEDA Secretaries since 1992. He was undersecretary for Population and Development and executive director of the country’s Commission on Population and Development up to Sept. 8, 2022, when he retired. He occasionally writes for Action for Economic Reforms.